HomeMy WebLinkAbout1990 01 01 - Evaluation of Rate Increase Requestg1� 110
WATER & SEWER
T +. Tl4 1 i hy( (Immn?T1V's rate
An evaluation oI till- J- IJ ,I,
increase request.
The following statistics were provided by Mary Scotti for the City
of Sebastian Workshop held on August 1, 1990.
The present base rate for water and sewer is $168.00 per building,
based on a capacity not exceeding 24,000 gallons per month. An
additional fee is charged for each building that exceeds the 24,000
gallons per month capacity. This base rate can be broken down to
$21.00 per unit per month for 3,000 gallons per month or $1,344.00
per month for all eight buildings for 192,000 gallons per month for
all eight buildings.
Meters have been installed for 28 months (3-22-88 to 7-20-90, see
Mary SCotti's "Actual Water and Sewerage Usage" chart). The minimum
allowable is, therefore, 28 months x 192,000 gallons/month
= 5,376,000 gallons. Actual usage is 4,051,000 gallons showing that
1,325,000 gallons were not used.
The total ofi the right hand column on Mary's chart for the 28 months
is $38,241.00 or $1,365.75 per month average.
This averag+harge breaks ddwn to $21.34 per month per unit over
these 28 months.
BACKGROUND:
The Sebastian Lakes Utility (SLU) Company facility was constructed
to serve:
The Clubhouse and Master Association property - 304 units
(64 units completed) - 8 acres of commercial property.
The f$sently planned property has beehexpanded to serve:
The Clubhouse and Master Association property
304 units (64 units completed)
16 acres of commercial property
North County Library
Note: After the August 1, 1990 Workshop, John A. Redmond of
Allen Engineering stated that SLU pays General Development
Utility (GDU) for a capacity based upon 400 units. This
capacity is under contract and will remain under contract
with GDU. It is believed that GDU supplies all the water
to Indian River County and to many other counties.
ANALYSIS:
The SLU rate increase application is based upon a three
Analysis (continued) page 2
month period, ending March 31, 1989. The data is annualized
in the application for reporting purposes.
The application provides comparison data for two levels of
consumption. One set of data is for a unit consumption of
3,000 gallons per month and the other is for a unit consump-
tion of 5,000 gallons per month. The propos•,l is not only
an attempt to raise the water ratesknd the sewer rate, but
it also attempts to charge a fee for consumption exceeding
1,000 gallons per month per unit. Presently, consumption up
to 3,000 gallons per month per unit (24,000 gallons per month
per building) is not subjected to a consumption fee.
The specified revenue requirement is $67,398. This is the
total revenue needed (in 1989) to operate the utility plant.
Since the major portion of the developed community has not
been completed, SLU has a yearly short fall in income.
The average yearly charge forrll eight buildings is $1,365.75
per month x 12 months = $16,389.00 per year. The shortfall
per year is, therefore, $67,398.00 - $16,389.00 = $51,009.00.
In order to cover this shortfall by the presently constructed
64 units, it would require a rate increase of:
($67,398-$16,389)
100% = 311%
$16,389
Our Association pays the Master Association a ratio of 64/304
for the operation of the Clubhouse and the maintenance of the
common elements (which includes the tennis court). If this
same ratio is used to cover the $67,398.00 requirement, the
Association's cost would be $67,398. x 64/304 = $14,189.05.
This is less than we presently pay.
The rate comparison in the application for a unit consumption
rate of 5,000 gallons per month is not a good comparison for
our usage; however, statistically it looks better. The present
unit charges for 5,000 gallons is $27.00, while the proposed
unit charges would be $95.45. The rate increase based upon
these numbers is ( 95.45_=_$27.00) 100%* = 254%
$27.00
The yearly revenues generated by a unit cost of $95.45 would
be $95.45 x 64 units x 12 months = $73,305.60.
The rate comparison for a unit consumption rate of 3000 gallons
is a realistic comparison. We actually consume 2261 gallons
per month per unit average. For 3000 gallons per month the
present charge is $21.00 per month per unit. The proposed
charges would increaso that to $83.79 per month per unit. The
rate increase based upon these --umbers is:
(tpo 7n _ t?i nn1
$21.00 100% = 299%
Analysis (continued) - 3 -
The yearly revenues generated by a unit cost of $83.79
would be $83.79 x 64 units x 12 months = $64,350.72. This
value approaches the revenue requirement of $67,398.00 per
year.
SUMMARY
The builder of Sebastian Lakes constructed the Sebastian
Lakes Utility Company facility to process water and sewerage
for the equivalent of 400 units. The planned community
included commercial property., a club house, and 304 residential
units. A library has recently been added. Only 64 units of
the planned 304 residential units have been completed. Delay
in construction of the other residential units is unfortunate
and has created an operating deficit fortthe-.,utility. The
residents of the existing units pay a fair share of the
operating cost of the utility. We pay 64/304 of the speci-
fied operating cost of the club house and a hi Per percentage
than 64/304 toward the specified revenue requirement of the
utility. The average water and sewerage usage is low because
most owners are not in the community year round and only one
or two people occupy most units when used.
Arthur Bauer